A monopoly sells its good in the United​ States, where the elasticity of demand is 

negative 2.2−2.2​, 

and in​ Japan, where the elasticity of demand is 

negative 6−6. 

 Its marginal cost is 

​$77. 

 At what price does the monopoly sell its good in each country if resales are​ impossible? 

Part 2

The price in the United States is 

​$enter your response here. 

​ (Round *your answer to the nearest*​ penny.)

Part 3

The price in Japan is 

​$enter your response here. 

​ (Round *your answer to the nearest*​ penny.)

To solve this problem, we need to use the formula for **price in a monopolistic market**, which depends on the elasticity of demand and marginal cost:

\[
P = \frac{MC}{1 + \frac{1}{E_d}}
\]

Where:
- $ P $ is the price the monopoly charges.
- $ MC $ is the marginal cost.
- $ E_d $ is the price elasticity of demand (a negative value for demand).

We will calculate the price separately for both the United States and Japan.

### Step 1: United States

The elasticity of demand in the United States is $ E_d = -2.2 $.

Using the formula:

\[
P_{US} = \frac{77}{1 + \frac{1}{-2.2}}
\]

### Step 2: Japan

The elasticity of demand in Japan is $ E_d = -6 $.

Using the same formula:

\[
P_{Japan} = \frac{77}{1 + \frac{1}{-6}}
\]

Let's compute these prices.### The calculated prices are:
- **Price in the United States:** \$141.17 (rounded to the nearest penny)
- **Price in Japan:** \$92.40 (rounded to the nearest penny)

If you have any more questions or would like further clarification, feel free to ask!

Here are 5 related questions:
1. How does the elasticity of demand affect pricing in monopolies?
2. Why are prices different in two countries with different demand elasticities?
3. What would happen to the price if the marginal cost increased?
4. How would price change if resales between countries were possible?
5. What role does price discrimination play in this scenario?

**Tip:** Monopolies can charge different prices in different markets when they face varying elasticities of demand, maximizing profits by adjusting prices based on local demand sensitivity.

A monopoly sells its good in the United States, where the elasticity of demand is -2.2, and in Japan, where the elasticity of demand is -6. Its marginal cost is $77. At what price does the monopoly sell its good in each country if resales are impossible? Part 2: The price in the United States is $___ (Round to the nearest penny). Part 3: The price in Japan is $___ (Round to the nearest penny).

Learn how to calculate monopoly pricing based on elasticity of demand for two different markets. This problem involves key concepts in economics and algebra, utilizing the formula P = MC / (1 + 1/E_d). Marginal cost is $77, and demand elasticity in the US is -2.2, while in Japan it is -6. Calculate prices for each market, rounding to the nearest penny.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation